The social distancing measures that have been implemented as part of the national emergency response are working, shown in the graph below [1].
The number of cumulative cases is beginning to flatten as the number of new cases significantly declines.
Our Thoughts On The Government's Response
Collectively, Federal, State, Territory Governments, and the Reserve Bank of Australia (RBA) have banded together to develop policies and initiatives to sustain Australian households through this challenging time as we navigate the COVID-19 crisis.
As is stands, an estimated $339.5 billion of measures have been announced to date.
These measures have focussed on payroll tax relief; rent relief; low or no-interest loans; grants to the vulnerable; funding for the health sector; funding for significantly affected businesses and sectors such as airlines, tourism, and education [2].
The Impact On Consumer Confidence
The weekly ANZ-Roy Morgan consumer confidence rating rose by 7.7% to 84.2 points.
Sentiment has lifted by 26.5% since hitting record lows (lowest since 1973) of 65.3 points on March 29th, likely linked with the reduction in new cases and the flattening of the curve as infection rates decline [3].
On the 21st of April, the Australian Bureau of Statistics (ABS) released new statistics on jobs and wages based on Single Touch Payroll data from the Australian Taxation Office.
The estimates in Weekly Payroll Jobs and Wages in Australia provide additional information on the economic impact of COVID-19 and complement monthly Labour Force statistics [3]. The data revealed that between 14th March and 4th April (the three weeks after Australia recorded its 100th confirmed COVID-19 case) jobs decreased by 6.0%. Total wages paid by businesses decreased by 6.7% over the period. It's clear that workers in hotels, cafes, and restaurants have been the strongest impacted by the COVID 19 crisis; with jobs down 25.6% in the space of three weeks.
The Government's Outlook
The Australian Government has stepped up to the plate; providing extra funds to support businesses, households, and the health sector on almost a daily basis.
While the stimulus has been substantial, the measures implemented following the consensus of the national cabinet and the RBA have largely been in line with the advisable criteria of targeted, scalable, and temporary.
RBA's Response
In a speech made on the 21st of April RBA Governor Phillip Lowe stated:
“The result of both the restrictions and the uncertainty is that over the first half of 2020 we are likely to experience the biggest contraction in national output and income that we have witnessed since the 1930s.
National output is likely to fall by around 10% over the first half of 2020, with most of this decline taking place in the June quarter.
Total hours worked in Australia are likely to decline by around 20% the first half of this year.
The unemployment rate is likely to be around 10 % by June, although I am hopeful that it might be lower than this if businesses are able to retain their employees on lower hours. The unemployment rate would have been much higher than this without the government's Job Keeper wage subsidy.
Our monetary response is keeping funding costs low across the economy and credit available. The fiscal response is providing significant support to both jobs and incomes.
Businesses are also helping their employees by keeping them on where they can and the banks are supporting their customers with more flexible terms. Together, these efforts are helping the Australian economy through a difficult period and positioning us well for the recovery.
We can be confident that our economy will bounce back and that we will see it recover. We need to remember that once the virus is satisfactorily contained, all those factors that have made Australia such a successful and prosperous country will still be there.”
In closing, if you want to stay up-to-date as the COVID-19 pandemic plays out to make sure you join our Weekly Property Market Pulse Newsletter here.
Bradley Wearne - General Manager & Head of Research at Meridian Australia
P: (02) 9939 3249
References
[1] Australian Government - Department of Health - COVID-19 Current Situation
[2] Australian Department of Innovation and Science
[3] ABS - Survey of Payroll and Wages
[4] RBA - April 2020 Speech